Oireachtas Joint and Select Committees
Tuesday, 16 October 2012
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Ireland-US Economic Relations: Discussion with American Chamber of Commerce Ireland
We will now have a discussion on the findings of the report entitled, "The Irish-US Economic Relationship 2012" by the American Chamber of Commerce Ireland. I welcome Mr. Peter O'Neill, Mr. Brian Cotter and Ms Joanne Richardson. I apologise for the delay in starting but we ran over in our discussions on a very interesting topic. I am sorry that we could not organise this meeting for an earlier date to coincide with the launch of the aforementioned report but our diary would not permit it.
Members are reminded of the long-standing parliamentary practice to the effect that they should comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I ask Mr. Cotter to make his presentation, after which we will have a question and answer session.
Mr. Brian Cotter:
Good afternoon. The American Chamber of Commerce Ireland would like to thank the committee and its chairperson for the invitation to discuss the Irish-US economic relationship and specifically to discuss the critical role of US companies here. As our report on the Irish-US economic relationship launched on 4 October shows, the positive impact on Ireland of the strong economic relationship with the United States of America is, quite simply, stunning and encouraging. Even since the global crisis started the economic relationship between Ireland and the US has grown even stronger and this investment is still growing in 2012. This year and last year have seen strong, net job growth from US investment. This investment continues to play a vital role in Ireland. The latest figures from our report show that US investment in Ireland soared by nearly 20% in 2011. At $188 billion, it now is five times greater than it was ten years ago. To put this into perspective, US investment in Ireland is well in excess of that in Germany, at $107 billion, or France, at $89 billion.
It is also significantly ahead of China, at $54 billion, and India, at $24 billion. It is heartening that there has not been a shift in the geographical preferences of US foreign direct investment, which remains directed towards Europe in general and Ireland in particular. The strongest statistics illustrating the importance of this relationship to Ireland is that with a total output of $58 billion, US business in Ireland now accounts for almost one quarter of our GDP.
Especially welcome in this report is the news of stabilisation and a modest growth in employment in the manufacturing sector. The sector has seen positive growth between 2009 and 2011 and overall 12,000 net jobs have been added by US companies in Ireland since 2000. This leaves the total direct employment number at a record high of 107,000 or approximately 6% of the workforce. It is vital to the sustainability of a strong economic relationship between the two countries that it remains very much a two-way relationship. Irish companies in the US have a total investment of €25 billion and employment levels remain strong. Such companies are estimated to employ 120,000 employees in their operations and last year they generated $42 billion in US sales through their US operations.
Ireland's position in Europe is central to our ability to attract investment. Our report finds much to be optimistic about in Europe's future ability to attract investment to our shores as it remains one of the largest economies in the world. Europe continues to account for 30% of global consumption. It is for access to this wealthy market that US companies are in Ireland.
The report predicts benefits accruing from Ireland's close proximity to what the report refers to as "the best business opportunities on the planet", specifically the growing markets of eastern Europe, the Middle East, north Africa and Russia and her satellites, a geographical area whose combined output is greater than that of China. The report advises that Ireland needs to continue to manage its cost base and be conscious that other jurisdictions are becoming more competitive from a taxation perspective. In addition, the number of technology-capable countries competing for investment has dramatically increased. At the same time, the US has done much to reduce costs domestically and has become more competitive.
The report states that Ireland must ensure our niche in the global value chains of US multinationals. While Ireland's to-do list is long, rising to a challenge is something at which the country excels. In partnership with the US, our economic relationship is expected to remain robust and mutually beneficial. It is important to remind ourselves that since the start of 2012, US companies have publicly announced investment worth $2 billion which will create more than 6,000 new jobs in what could be seen as a healthy diversity of industries, business activities and regional spread. Investment by these firms has been instrumental in helping to create and develop a world-class labour force, critical in dispensing technology and innovation capabilities across the economy and key in expanding the global reach of indigenous firms. The past two years have been the strongest two-year period of inflows from the US on record, with a surge in capital and confidence by US investors in Ireland. This investment has bestowed macroeconomic benefits not only on the country in general but also in respect of building our research and development and, increasingly, commercialisation capacity.
This report is one of the American Chamber of Commerce's contributions to building up Ireland's reputation as an attractive business location for investment. It will be used to grab the attention of would-be investors in order that they fully examine the reasons their peers are here and continue to invest. This year's report concludes that despite a number of stiff headwinds, the ties that bind Ireland and the US remain sound and, while showing some cyclical strains, remain structurally strong.
Bhí an cur i láthair sin an-suimiúil. It goes without saying that the relationship between Ireland and the US is of great importance, as is the success of Ireland in attracting foreign direct investment and of US companies operating here. This relationship must be strengthened and developed. It is startling to note that 107,000 people are employed by US firms, while Irish firms employ 120,000 people in the US. I hope the balance will improve. The reason the figure is so startling is that we tend to believe the relationship is much more proportionate to the sizes of the respective countries.
I could focus my entire contribution on the positive relationships between Ireland and the US where much that is good is taking place. However, one aspect of my role is to highlight issues that could be resolved by the Legislature. Between January and August last year, exports to the US amounted to €14 billion. Over the same period this year, the value of exports to the US declined by €2 billion. The issue of the so-called "patents cliff" has given rise to much discussion here because approximately 60% of our exports are in pharmaceuticals and chemicals. Is there any relationship between the reduction in exports to the US this year and the patents cliff and, if not, can the delegation assist in identifying the reasons for the decline?
All the main parties in the Dáil, including Sinn Féin, support Government policy on corporation tax, which has been important in attracting US investment. However, the State does not focus sufficiently on improving other potential competitive advantages. I am concerned that we may become a bargain basement tax location rather than a country that trades on competitive advantages such as high levels of productivity, low energy costs and good access to export markets, all of which are important for companies. We know how Ireland's tax policies play on the economic front, including with the American Chamber of Commerce. However, as we approach the presidential election in the US, we must bear in mind that they also play on the political front. I note startling figures indicating that €27.8 billion of profits were generated by US companies operating in Ireland and €28 billion in royalties were repatriated. The so-called double Irish taxation system and other issues have also arisen. The Irish Times recently reported that the effective corporation tax rate here is 4% when one takes account of the various activities companies engage in - logically, from their perspective - to reduce their tax liabilities. In highlighting these issues, I stress that they are only one aspect of an enterprise relationship with the US that is, for the most part, successful, positive and growing. I ask the delegation to respond.
Ms Joanne Richardson:
I will respond to a couple of the Deputy's points on taxation. We all agree that the cornerstone of Irish industrial policy for the past five decades has been our corporation tax. We always reinforce the point that the jewel in the crown of Ireland's offering remains our 12.5% corporation taxation rate and overall corporate taxation policy. This is what gets us to the table when companies are considering world investment decisions. Any uncertainty or greyness around our corporation tax can be very damaging in terms of retention and growth of US investment.
Mr. Cotter referred to assets held by US companies in Ireland. Consistently for the past seven years, including this year and last year, 70% of all of new investment in this country has come from companies that are already based here. The opportunity for future investments - the badge of honour or advantage we have - is the 600 global companies that are located here.
As the statistics speak for themselves, I do not propose to repeat what Mr. Cotter said about jobs, investment and so forth. On the US side, we are mindful of highly damaging commentary that is made about Ireland's tax status - for example, when the country is labelled as a tax haven. While there some cases of aggressive tax practices, they all come within the ambit of approved taxation policies.
Ireland is in the highest international tier, according to the OECD and has tax treaties with 60 countries, including the United States of America. There is an onus on industry, the Government and all of those speaking to the international media to ensure that Ireland is not branded as a tax haven. We are in full compliance and we must all remember that having a highly compliant, transparent and open taxation system remains a big jewel in our crown. We are all aware of the forthcoming US presidential election and tax codes always features in election debates. However, all of our multinational companies are global and need bases outside the United States of America. Europe is our biggest market and will be for the foreseeable future. In that context, Ireland, the Netherlands and the United Kingdom are the top three destinations for US investment flows into Europe, while approximately 50% of all US investment still flows into Europe. Therefore, we need to ensure that Ireland continues to be positioned as a global location for foreign direct investment and what keeps us at that table is our corporate tax rate of 12.5%
Mr. Peter O'Neill:
Most companies, when deciding to make investments, look at the long term rather than the short term and critical in that is the question of certainty. In fairness to successive Governments, they have been very consistent on this issue and have recognised that it is a cornerstone of our economic policy and will stay that way. My own experience and that of other CEOs I have spoken to indicates that the competition for foreign direct investment is intensifying all of the time. Not only are some countries improving their game, others which did not have the capacity to compete in the past are moving up the value chain as well. If there was any hint of uncertainty around our corporate tax rate, other countries would play on that to our disadvantage. That is why it is very important that we are rock solid on that issue.
Apart from the tax rate which, as Ms Richardson said, is the key foundation, there are other policies that we also need to work on. The mandates of a lot of companies in Ireland have been changing and evolving in recent years. For example, the whole issue of research and development and the attractiveness of doing it in Ireland is critically important. Indeed, last week we had the announcement from an Irish company, Kerry Group, that it has decided to locate a research and development facility in Ireland. That is a very important issue, as is the issue of talent and the ability to attract skilled workers, which we would be very happy to discuss further.
Mr. Brian Cotter:
I will finish on the issue of tax and then go on to that question. In terms of the history of Irish tax policy, the corporate tax rates were even lower at one stage but Ireland did not attract the same level of investment as it does now. Today we have a combination of a strong competitive position, particularly with the talent that we have here, and a very good business proposition, with the certainty surrounding the 12.5% rate. There are other locations that have lower rates but we are not advocating any change. We want certainty, which is a very valuable commodity.
Regarding the patents cliff in the pharmaceutical sector, the Deputy has a very perceptive insight into the industry and this is an issue that has been predicted for some time. The large pharmaceutical companies have had a gap in their research and development platforms for some time. It was always known that at the end of the last decade or the beginning of this one, their product portfolio would look a little weaker and hence, they have been acquiring a lot of companies. I do not know if the committee is aware of the life sciences task force, established by the IDA and Forfás, which is very interesting.
In recent years we have seen a strengthening of the pharmaceutical sector although there is no doubt that a transformation is under way. Companies are making major decisions about their product mix. Some, whose products are going off patent, are still interested in competing in those markets, while others are not. In terms of the number of companies in the sector, new ones have come into Ireland in recent years, like Amgen and Mylan. The sector looks quite dynamic and there will be some churn there, but that is no different from any other sector which has transformed over recent decades. Companies are doing very different things now to what they were doing ten or 20 years ago. That is something that we will all have to watch. It is heartening, however, that from a policy perspective, this change is well understood and is under constant examination to determine how we can strengthen those companies in the longer term.
In terms of the aforementioned value chain, some of the pharmaceutical companies, such as MSD, for example, are looking at other opportunities in their business, beyond manufacturing. Some are considering research and development opportunities and indeed, research and development activity is expanding quite healthily in Ireland. Other issues like centralised services, European headquarters, IT development, finance and so forth are being considered and the companies in question are expanding in many different ways within the sector. That is all playing to the strengths of Ireland as a location for international businesses to set up and run their regional headquarters. There is a lot to be optimistic about and the sector is definitely one to watch.
Mr. Brian Cotter:
I have not analysed that $2 billion but in terms of exports to the US, one must look at the mix of products and also look at the figures over time to determine whether there are seasonal factors at play or a more fundamental change in the supply chain. We must also determine whether Irish companies are doing more business through their subsidiaries in the United States. I cannot answer the Deputy's question directly as to whether there has been a fundamental change. However, one thing that is clear is that the sector is quite active in terms of employment and business opportunities, which is healthy and very important for the wider economy.
It is good to have an opportunity to discuss the report from the American Chamber of Commerce Ireland, which we received earlier in the week. In the context of the US presidential campaign, I am conscious of much commentary around the notion of bringing jobs back home. I have also heard it argued that the environment in the US is better for setting up businesses now, with improved competitiveness, reduced energy prices and so forth. The witnesses made the point that a European base will always be important but is there a trend towards establishing bases in the United States in preference to Europe? Are the aforementioned arguments having an effect?
I also wish to raise the issue of skills, to which Mr. O'Neill referred earlier. There has been regular commentary from the chamber on the skills needs of its member companies and on our education system and I ask the witnesses to elaborate on that area.
Mr. Brian Cotter:
Regarding the issue of re-shoring, our report emphasises the fact that the way US companies do business and drive their export platforms is through foreign direct investment. Europe will still remain a very significant part of business for US companies. For the United States, Europe represents over 50% of world economic activity. It is a strong market place and US companies will still want to do business here for the foreseeable future. The last two years have seen the strongest investment flow to Ireland on record, based on the fact that not only do we have a very good business proposition but also great experience built up within the operations and great talent, in terms of leadership. Those people are at the most senior level within their organisations, which provides us with great opportunities. We will always have to respond to competitive challenges and there is no doubt that the mid-to-lower end of manufacturing and the energy-rich industries in the US will become more competitive over the next decade, mainly because of changes in the labour market and lower energy prices in the US. We must be sensitive to that and address it. It is interesting that in many of our member companies, one hears commentary around skills gaps in the United States, which still exist. That is critical and will play to our advantage if we can address it. Ireland is often mentioned in the same breath as Singapore. Ireland is to Europe what Singapore is to Asia and we must capitalise on that and build on the investment that has come in.
Mr. Peter O'Neill:
To address the question of skills, there are a number of metrics in terms of how Ireland is positioned on skills and there are many positive points.
While there are several positive points in terms of the number of children participating in third level education, we have also noticed warning signals for several years. We have been vocal about the need to be cognisant of these signals.
In regard to the changing mandates of companies located here, we are all trying to move up the value chain. While this is great in terms of the quality of the jobs offered, it also means they will increasingly be skills based. The demographic changes that will take place in Europe in the coming 15 to 20 years offer Ireland an opportunity to become an attractive hub if we have the right quality of people available. It is a question of putting in place long-term educational policies to reform everything from the junior cycle programme to third level, balanced with shorter term tactical actions because, obviously, we will not see the college outcomes of junior cycle programme reform for another eight years.
I enjoyed reading the report which was very concise. Is the positive message about the number of jobs Ireland generates in the United States being heard in that country? I know we are a gnat on a big buffalo, but Irish companies have generated 120,000 jobs in the United States.
Ms Joanne Richardson:
Our report will be widely distributed in the United States to promote that fact. I visited that country recently to attend a global conference of American chambers. Inward investment is high on the US agenda. Ireland was the tenth largest investor in the United States, which is a very positive position. In respect of the general public relations game about investment in Ireland and international messaging, part of the chamber’s job is to promote awareness that the flow of investment moves in two directions. This two-way relationship benefits both nations.
It is great to hear a positive story for a change. How can we attract greater foreign direct investment in Ireland and is there anything the Government can do to help? Can our guests offer advice on how we can develop entrepreneurship in Ireland?
Ms Joanne Richardson:
Last year was one of the strongest for investment in Ireland. The €30 billion that came into the country was greater than the amount US companies invested in Asia, including China, and this year 6,200 jobs will be created if one counts the five announcements made today. Some 70% of this investment has come from the existing base of countries. We should focus on retaining existing investments.
The Economist Intelligence Unit issued its annual report on foreign direct investment at the end of March. More than 315 US multinationals operating in the United States, Europe and Asia were surveyed and the report projects further investment of €7.7 billion and that 20,000 new jobs will be created by US companies by 2014. The projections are positive in a global context and Ireland remains well positioned thanks to our existing base and IDA Ireland’s focus on attracting newer companies for sales, marketing and support functions in Europe.
In regard to retaining investment, our corporation tax rate is critical, but the biggest issue concerns our skills base. Mr. O’Neill has been proactive on this issue during his presidency of the chamber. There is a big pull on global talent, particularly in the short term, and while good policies are being developed for the medium and longer term, we face an immediate need to recruit persons with particular skills in Ireland. We produce a work activation survey on 6 July every year to correspond with our 4 July event. On that date more than 2,500 positions were vacant across multiple sectors of industry and 53% of these positions will have to be filled from outside the country. That figure was higher a couple of years ago and, while we would like it to decrease further, companies are indicating the need for certain tactical positions and actions to be taken to address immediate skill requirements.
Mr. Peter O'Neill:
To reply to Deputy Áine Collins’s second question, we have great strengths in particular clusters such as information technology, pharmaceuticals and medical devices, and finance. It is a question of deciding where we go from here. More recently we have seen considerable investment by Internet companies. Perhaps we need to do more to attract start-up and smaller entrepreneurial companies. The other clusters have already achieved good penetration rates, but there is a limit to the number of additional companies which can be attracted to Ireland.
Mr. Peter O'Neill:
It has to be high on IDA Ireland’s agenda. Many of our member companies have developed linkages with Irish start-up companies. At one stage Digital Equipment Corporation released statistics which indicated that more of its former employees were working in Ireland than it employed at the time. That is another good spin-off from the location of US companies in Ireland.
Mr. Brian Cotter:
Deputy Peadar Tóibín's question is relevant because when one considers the interface, the issue of linkages and opportunities arises. Enterprise Ireland and IDA Ireland are investigating this area with a view to identifying opportunities. In general, it is necessary to find out what is driving the multinationals. One of the trends in the past ten years has been consolidation of supply chains. Irish companies must ask whether they are fit for the purpose of supplying multinational companies on a global basis rather than just locally. In some cases they will need to upgrade their skills and technology. There is a greater understanding of this issue and I hope the current programme Enterprise Ireland and IDA Ireland are running will identify opportunities.
Multinationals are increasingly drawn into Science Foundation Ireland’s programme of investment in research and development. Current trends such as the convergence of sectors suggest there will be better opportunities for collaboration in the research and development space as we progress from research to development and commercialisation. Irish companies can take advantage of these opportunities to become involved with multinationals at that level. The investments Irish companies are making in research and development through Enterprise Ireland should allow for a confluence of entrepreneurship. The university-led programmes around the centres for science, engineering and technology will need that injection of entrepreneurship if we are to make their research outputs more commercially applicable.
We will see more development opportunities and jobs. Perhaps in ten or 20 years we will be talking not about indigenous or foreign companies but about Irish-based companies. That is probably where we would want to go to in the conversation, namely, to have a mix of ownership and management which would be world class in their fields.
I welcome the delegation and congratulate Mr. Joseph Quinlan on his excellent report and for pointing out the two-way economic relationship between Ireland and the USA that most, perhaps 99% of, Irish people are unaware of.
The 12.5% corporation tax rate is the cornerstone, as was said, but we are an English speaking country and Governments of whatever hue are in support of multinational investment into Ireland, which is very important. We heard the Sinn Féin representative, Deputy Tóibín, eloquently supporting the 12.5% corporation tax rate. That is refreshing and important because, as was said, confidence in the future is critical before any company will invest.
One of the points I find very satisfying is the transfer of management skills. In the 1980s many of the chief executives of multinationals in Ireland were American ex-pats whereas we now have Mr. O'Neill and all of this Irish management. We were an agriculture-based country but we were dragged into economic development by the multinationals, in my opinion. Much of my personal life is tied up with all of this.
I have two questions. First, page 81 of the report states:
...there is a better-than-fair chance that a transatlantic free trade agreement between the EU and the United States could be up for serious discussion after the US presidential elections, with both Republican candidate Mitt Romney and President Obama in favour ... of such of an agreement. As a bridge to both the US and Europe, Ireland would benefit from a trade agreement that would deepen the commercial ties between both parties.What role can the American Chamber of Commerce in Ireland and fellow American chambers of commerce in other EU countries play in promoting such an agreement from here on?
Second, the report states at page 86: "Ireland's “to do list” is long; put another way, the race to remain globally competitive never ends." We take that for granted. If the witnesses could pick one, which would they say is the most important item on the "to do" list?
Ms Joanne Richardson:
I will take the first part. To pick up on two points, and Mr. Cotter and Mr. O'Neill will back me up on this, there is wide recognition and appreciation among all of our members around the country of the importance of cross-party support for our 12.5% rate. This has come very much to the fore since the troika came in and, in the last year and a half, has almost become a national strategic issue for us all, publicly, politically and in business. There is wide recognition and appreciation of that.
The second point is also well put. Nearly every US company in Ireland is now run by an Irish person and many of them now have global mandates. We have many global vice presidents where the company or the facility here in Ireland has become a global centre of excellence. That is why, in recent years, we have seen so much reinvestment by companies here.
On the transatlantic trade agreement, we are aware this will probably come to the fore after the elections. We have already had discussions with Mr. Tom Donohue, the chief executive and president of the US Chamber of Commerce, who is a very great friend to Ireland and has been to Ireland many times. There have also been discussions among the AmChams in Europe, where there are 39 or 40 AmChams. There is an infrastructure in place through our AmChams in Europe and our connections with our US chamber colleagues. Locally, the support of the Irish presidency of American Chamber of Commerce in Ireland will be to get behind and be vocally and physically supportive of pushing that trade agreement forward.
Mr. Brian Cotter:
On the trade deal, it is estimated the current tariffs that exist broadly between the US and the EU are between 3% and 4%, although they vary depending on the products and sectors. There is an opportunity in this regard. The main challenges are the non-tariff barriers such as bureaucracy, getting regulation on both sides working together and being cognisant of both sides when rules are being made so we create a move towards a more internal market. There have been estimates from the US Chamber of Commerce and a group called the Business Roundtable in Washington that this could add between 1% and 2% to GDP growth in both economies, which is not an insignificant amount.
With regard to the wish list, we are currently starting a process we undertake every autumn of meeting multinationals. In the next couple of days we will meet approximately 150 CEOs of multinationals, having started this morning in Dublin. Central to our approach to meetings with Ministers in the last couple of months is that, while we understand what needs to be done in terms of the fiscal adjustment and the targets that are set out, there is great concern about the costs of employment, which goes back to a number of points we have made today. One of the strong pillars of what we have in regard to foreign direct investment is the experience, leadership and talent we have in our people. These people are highly mobile, however, and it is a fragile resource. We need to be very conscious of this when we look at the costs of employment either directly, in terms of marginal income tax or the income tax burden, or indirectly, in terms of changes in the social welfare code that might apply in regard to sick leave and so on. We ask Deputies and Senators to be cognisant of this in the upcoming preparations for the budget and in any proposals being considered.
Mr. Peter O'Neill:
I endorse that in terms of the feedback of our members. We met with approximately 50 CEOs this morning in the first of our forums. Top of their agenda is this whole question of attraction and retention of talent and, therefore, of personal taxation. In fact, one example quoted this morning came from a company which is trying to persuade a particular key individual to move from the US to here. Given a marginal tax rate of 35% in the US versus 52% here, it is a difficult sell if one is trying to persuade a key individual. As Mr. Cotter said, while recognising the overall fiscal challenge over the next number of years, we need to be very careful that we do not impose any further burden.
That is a very hard issue to deal with. My personal opinion is that we should be taxing higher pay, although that may not be my party's view. The cuts are so devastating that it might be fairer to tax people on higher incomes. That is where I come from. Is that really a matter of life and death?
Mr. Brian Cotter:
I ask the Senator to consider that we have to make strategic choices at this time. A strategic choice we are laying out here is the investment platform that is strongly based on track record, which is one of the pillars used by the IDA when it sells Ireland. That track record is built on experience but it is a fragile resource. We need to be strategic about this, understanding there are trade-offs. We are just asking the Government, Deputies and Senators to consider this point, knowing there are tough choices to be made. Our proposition goes no further.
I would like to be associated with the words of welcome. I apologise as, while I saw some of the presentation on screen, I was caught up with another meeting.
I will be brief. It is great to see the fluid and flexible nature of the business relationship and the enthusiasm to bring it along and to encourage more foreign direct investment into this country, hopefully to our mutual benefit. We know that is business and that business requires reciprocal benefits on each side. In all manner and means, we are very geared towards that here and I know it is something the Minister, Deputy Bruton, in particular, pursues doggedly.
At a certain level we have agreements and arrangements but in the context of Irish citizens in the United States who do not have permits and are not there legally, would it be worth considering that American citizens should get work permits for this country? A reciprocal arrangement could be set up to our mutual benefit. I am surprised that approach has not been pursued. For example, we issue 50,000 working visas to the US and it does the same for us in exchange. A similar arrangement is in operation with Australia. Citizens immediately know a programme exists of which they can avail.
Senator Clune referred to skills shortages in the ICT sector. At times there are difficulties obtaining work permits, although I accept there is a high success rate. Unfortunately, it seems that key personnel fail to transfer. I accept the skilled workers we want are not confined to the US but we could take it to the next level and allow US citizens to come to this country to work, if that is what they want, rather than always going there to ask for help. We are a small open economy and the United States is a good friend. If we take such an approach on a reciprocal basis perhaps it would be more appealing to the US Government and the various interests in that country. It would also mean that American citizens could follow their investment money.
Mr. Peter O'Neill:
It is not a specific proposal that we have considered but it would merit strong consideration. We support the principle that we must make it easier and more attractive for people to come to this country. It is not just an Irish phenomenon; there is a worldwide shortage of ICT skills. Anything we could do to make this country a more attractive and easier location to attract talent is well worth considering.
Problems obtaining visas arise frequently. It has been said that companies only fill approximately half of job vacancies from among Irish people. Are there problems or delays in obtaining visas for foreign workers? The committee wants to help with such issues.
Ms Joanne Richardson:
We have consulted with our member companies in recent months and, as Mr. O'Neill indicated, as recently as this morning at our CEO forums. There are company-specific issues around visas. There is an ad hoc route via the IDA for individuals. However, what was taking four months a year and a half ago is taking six to nine months once the person has been identified and the company has carried out its due diligence and offered them a job. What happens in the world we live in is that with such a delay either the project is gone or the person is gone. Companies have real life examples of where investment has been lost. We have officially made representation on the issue. One aspect is the processing of visas and the other side on which we have more work to do ourselves is opening up the visa system and welcoming people with certain skills into the country on a green card system to build a pool of skills. We must build such a pool in the short term.
Reference was made to comparative marginal tax rates between the United States and this country. What are the comparative effective tax rates between both countries? Am I correct in saying the Netherlands receives the greatest level of FDI as per the report? It has one of the highest marginal tax rates in the world. I wish to get a better understanding of the issue. We are having an important debate coming up to the budget. We hear it said that if we touch the marginal tax rate in this country we will affect the level of investment and jobs created. It is important for us to be able to provide an evidence base for our policy. Is there research of the job versus the marginal tax ratio internationally?
We are starting to get the evidence but there is a perception from the companies we are dealing with that it is an issue, even in the feedback from the witnesses. Even if the issue is not serious, there is a perception around it and it is important to tease it out.
Are any other barriers emerging from interaction with companies? I accept the top one or two have been addressed, but are there other issues on which the committee could work to ease the pain? We have dealt with problems for member companies last year such as the US gap and changes in accounting rules. The engagement was slower than would normally be the case with Irish companies, which come straight to us with a problem much more quickly. I am conscious that there might be issues with which help is required. The companies could engage with the committee on a more regular basis. We wish to tease through problems and make it easier for people to create employment in the country.
If there are no other comments we will conclude the meeting. I appreciate the attendance of the witnesses. It was good that they could come before the committee. I welcome ongoing engagement with the American Chamber of Commerce. We are here to help.